Poultry producers to feel pinch

Some increase in poultry prices is inevitable as the industry battles with a sharp spike in the price of yellow maize due to dry weather and stock shortages.

SA Poultry Association chief executive Kevin Lovell said yesterday that the recent price increase on yellow maize was one of the biggest concerns for poultry producers.

Not only will the high prices hurt the industry locally but it would negatively affect its international competitiveness as maize prices were falling elsewhere in the world.

The increase in yellow maize prices meant that poultry producers would have to pay more for chicken feed, and Lovell said it would be impossible to pass the full cost down to consumers.

“The immediate effect would be on some of the profitability of poultry companies, which are already in a poor state and the possible secondary effect would be on the actual product price,” Lovell said.

This comes at a time when the industry is adjusting to a tariff increase of 8.75 percentage points on average imposed on chicken imports. The industry also faces major production cost problems stemming mainly from the high input costs.

Lovell had previously said that both poultry producers and consumers were unlikely to feel any impact from the recent import tariff increase, as the tariffs were levied at the point of import and not of sale. Last year poultry producers were faced with high production costs coupled with an increase in cheap imports, particularly from Brazil and the EU. Some companies opted to restructure, resulting in job losses.

Lovell said high maize prices would raise production costs and would limit the ability to recover costs for companies that were already in a poor state. – Nompumelelo Magwaza